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Is the glass half full or half empty....
You all know my long term views on gold and that my price objective is over $1600. However, I still think that gold could be in a corrective mode short term.
Today, was a classic up day in gold, and by that I mean, gold at it's highs was up $21 only to give back 1/3 of its gains to close up $14. Now, yesterday, gold tried hard to make a stand from the depths, but in the space of 20 minutes or so, slipped $10 to close on the lows of down $18.
This is not the stuff of a natural market. I'm sorry, call me crazy, but I still think this market has teh unseen hand working against it. You can see it in the trading. Did you notice that platinum closed near its highs and palladium closed at the high. Those are perfect examples of true unhindered markets.
Why do I think the gold market constantly has a lid on it? I am glad you asked that. First, look at the trading pattern. Usually higher in Asia to get beat up in Europe and then in NY. Gains almost always seem to be halved, or erased. Losses are almost added to and the close on a bad gold day is on the low. Bad economic news is sometimes bad for gold, and good economic news is almost always disasterous for gold. A free trading security usually has various daytrading patterns.
Second, an out of control gold price signals that something is seriously wrong with the world's economy and the CB's of the world simply cannot let that pass without some serious fight. Why do you think the ECB is constantly dumping gold on the open market? In this type of environment, you would think they might either slow the sales and take advantage of the higher prices. Yeah, yeah, I know they need to sell in order to finance the government, but that's not the only reason. They sell in order to cap the price and slow the ascent.
It's not a secret amongst the world CB's and govt's that we are on the brink or already in a worldwide recession. The situation because of the subprime/derivative situation is only going to get much, much worse. Just look at what's going on, everyday, brings some sort of tale of woe from a major financial institution somewhere. The fact that MBIA and ABK have AAA ratings are a joke. Who doesn't know that the rating aagencies (jokes themselves) are holding off cuting the ratings until some sort of bailout plan is reached. Who doesn't expect that eventually the government will guarantee all the crap that was insured by these companies? Does this sound like something that is not friendly to gold? Does gold have anywhere to go but up over the long term?
The Fed over the last week has cut 1.25 points and that still has not comforted the market. Today, Philly Fedhead had the balls to come out and say the Fed is concerned about inflation. Please, don't insult the Wall Street intelligence like that. That's like the guy who weighs over 400lbs ordering a quarter pounder with cheese but with a diet coke because he is concerned about his weight.
Back to my orginal gloominess about gold. Since last week, I have been warning the readers of this blog that gold was due for a fall because the gold stocks were acting crappy and did not confirm the recent new highs that gold was making on a daily basis. I thought gold would come in like any other overbought security. Then the jobs number hit on Friday and we had all the associated bullshit that went along with that since then (the dollar reversal, yada, yada, yada). Now I am convinced that gold is coming in, not on its own valition, but because some type of program is in operation. What else could explain the drop on absolutley positive news for gold? You tell me.
One other thing that really pisses me off are these jackoffs who are constantly calling for gold's demise. And to make matter worse, most of these topcallers are people who have absolutely zero true knowledge of the metal and how it works. The only things more terrible than these morons are those who profess to be friendly to gold, only to keep calling the tops at every correction. I have seen too many gold experts literally say the move is over when this or that happens. Love me or hate me, I have made it well known and have not wavered from the opinon as to where I think gold is headed over the next few years.
Anywho, I guess being out of the office and working from home does gold well, as overnight, gold was nicely higher coming into NY and built on those gains throughout the day before the typical NY 1/3 giveback. As usual, the gold stocks acted ok, but nothing great. They still are not confirming the move in the metal.
On the positive side, it was nice to see gold give a nice F you to shorts and quickly regain the $900 level so quickly. Whether it can hold that level is another question.
Today, was a classic up day in gold, and by that I mean, gold at it's highs was up $21 only to give back 1/3 of its gains to close up $14. Now, yesterday, gold tried hard to make a stand from the depths, but in the space of 20 minutes or so, slipped $10 to close on the lows of down $18.
This is not the stuff of a natural market. I'm sorry, call me crazy, but I still think this market has teh unseen hand working against it. You can see it in the trading. Did you notice that platinum closed near its highs and palladium closed at the high. Those are perfect examples of true unhindered markets.
Why do I think the gold market constantly has a lid on it? I am glad you asked that. First, look at the trading pattern. Usually higher in Asia to get beat up in Europe and then in NY. Gains almost always seem to be halved, or erased. Losses are almost added to and the close on a bad gold day is on the low. Bad economic news is sometimes bad for gold, and good economic news is almost always disasterous for gold. A free trading security usually has various daytrading patterns.
Second, an out of control gold price signals that something is seriously wrong with the world's economy and the CB's of the world simply cannot let that pass without some serious fight. Why do you think the ECB is constantly dumping gold on the open market? In this type of environment, you would think they might either slow the sales and take advantage of the higher prices. Yeah, yeah, I know they need to sell in order to finance the government, but that's not the only reason. They sell in order to cap the price and slow the ascent.
It's not a secret amongst the world CB's and govt's that we are on the brink or already in a worldwide recession. The situation because of the subprime/derivative situation is only going to get much, much worse. Just look at what's going on, everyday, brings some sort of tale of woe from a major financial institution somewhere. The fact that MBIA and ABK have AAA ratings are a joke. Who doesn't know that the rating aagencies (jokes themselves) are holding off cuting the ratings until some sort of bailout plan is reached. Who doesn't expect that eventually the government will guarantee all the crap that was insured by these companies? Does this sound like something that is not friendly to gold? Does gold have anywhere to go but up over the long term?
The Fed over the last week has cut 1.25 points and that still has not comforted the market. Today, Philly Fedhead had the balls to come out and say the Fed is concerned about inflation. Please, don't insult the Wall Street intelligence like that. That's like the guy who weighs over 400lbs ordering a quarter pounder with cheese but with a diet coke because he is concerned about his weight.
Back to my orginal gloominess about gold. Since last week, I have been warning the readers of this blog that gold was due for a fall because the gold stocks were acting crappy and did not confirm the recent new highs that gold was making on a daily basis. I thought gold would come in like any other overbought security. Then the jobs number hit on Friday and we had all the associated bullshit that went along with that since then (the dollar reversal, yada, yada, yada). Now I am convinced that gold is coming in, not on its own valition, but because some type of program is in operation. What else could explain the drop on absolutley positive news for gold? You tell me.
One other thing that really pisses me off are these jackoffs who are constantly calling for gold's demise. And to make matter worse, most of these topcallers are people who have absolutely zero true knowledge of the metal and how it works. The only things more terrible than these morons are those who profess to be friendly to gold, only to keep calling the tops at every correction. I have seen too many gold experts literally say the move is over when this or that happens. Love me or hate me, I have made it well known and have not wavered from the opinon as to where I think gold is headed over the next few years.
Anywho, I guess being out of the office and working from home does gold well, as overnight, gold was nicely higher coming into NY and built on those gains throughout the day before the typical NY 1/3 giveback. As usual, the gold stocks acted ok, but nothing great. They still are not confirming the move in the metal.
On the positive side, it was nice to see gold give a nice F you to shorts and quickly regain the $900 level so quickly. Whether it can hold that level is another question.
posted by Neal | 8:48 PM
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